Thursday, August 4, 2011

Thursday 8/4/11 Market Update

The market took a huge loss today following the bearish rising wedge pattern identified in yesterday's update. With thoughtful consideration, the count still remains unchanged.

It is not unusual for the 5th wave of an an extended 5th wave to be extended. Wave [v] is clearly longer than [iii] and wave (v) of [v] is now longer than (iii), so this action makes sense.

The free-fall of prices with slope increasing to the downside is a sign of fear and panic which is also in line with the extending 5th count.

The market is quite oversold at this point with oscillators at very extreme negative levels. This "shadow" of the market is also in line with the wave count.

The better proportionality between (W) and (Y) actually makes the count look better. C must not extend too much farther so it is still in proportion with A and B however. Clearly support was broken this week, but it is typical for second waves to retrace most of their preceding 1st wave counterpart.

The expectation is for a final impulse to complete that began at yesterday 's high following the short term wave count in the 1 minute chart above. It is critical for the mid 1100s to hold. Prices can move somewhat below the 61.8% retracement level above, but prices should bounce immediately after reaching these levels.

The market is poised for some huge up days after the current downward wave completes, even if a significant market top was reached earlier this year.

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